Nobody wants to find themselves in an IRS audit, but you do not have to face the IRS alone. FMH has significant experience defending clients in these proceedings.
Our clients range from business entities to individuals, trusts, estates, and tax-exempt organizations. Our engagements cover a wide variety of substantive tax issues involving income, estate and gift, employment, international, and excise taxes.
We have handled audits involving a wide range of issues, such as partnership and S corporation basis, captive insurance, debt versus equity, substantiation of business expenses, allegedly abusive trust structures, unreported income, unreported foreign bank accounts, unfiled tax returns, change of accounting methods, FBAR and other international penalties and many others.
IRS Audits
An audit is the first step in the process of the IRS examining a taxpayer’s records and potentially assessing taxes and penalties.
The audits can range from simple (e.g., a correspondence audit to verify mortgage interest, medical expenses or other deductions) to complex (e.g., financial products transactions, trust structures or complex tax issues).
During this process, the IRS can require the taxpayer to submit their books and records or even meet with an IRS agent for an interview. FMH will be with you each step of the way.
We help taxpayers understand the issues in the audit and formulate strategies for defending the audit. We will advise on how to address the substantive tax issues in the audit but also on how to respond to requests for documents or even interviews, whether to extend the statute of limitations and other procedures.
Not only does an audit involve a potential assessment of tax, but the IRS can also seek to impose penalties that can be 20%, 40% or even 75% of the tax that is alleged to be due. IRC §§ 6662, 6663. When available, we can develop strategies to contest the assertion of penalties.
In many instances, a taxpayer can resolve and audit on favorable terms, but of course, every taxpayer’s situation is unique.
IRS Office of Appeals
If an audit cannot be resolved by agreement with the IRS agent, the taxpayer can file a protest and request that the determination to assess tax and/or penalties be reviewed by the IRS Office of Appeals.
This is an administrative appeal process that is designed to review decisions of revenue agents at the end of an audit to impose taxes and penalties. The purpose is to provide a check on the actions of IRS agents and to try and resolve cases before they reach litigation.
Many cases can be resolved at appeals, but this requires an effective presentation of the facts and legal issues to the appeals officer who hears the case.
While FMH attorneys try to obtain favorable results during the audit stage, we are also preparing the case to be presented to IRS Appeals, if necessary.
Whether we are engaged at the beginning of the audit, or after other attempts at resolution have failed, our team knows how to explore approaches from multiple angles to achieve the best result for our client.